Teaching your kids about money isn’t a single conversation. It’s a process that goes on until they’re on their own – and beyond. But talking about money can be tough, so here are some tips for ensuring your kids receive the financial education they need.
1. Teach by example. Kids learn how you handle money long before you start to consciously teach them. When they see you buying on impulse or preparing a budget, they may not understand, but they will take it in. So, demonstrate the kind of financial behavior you hope to teach them eventually.
2. Start early and keep going. Your 3-year-old needs to know that you sometimes have to wait to buy something, but your 18-year-old needs to know to pay the credit card bill every month. The Treasury Department’s Money As You Grow page has 20 lessons to teach your kids, grouped by age, and activities to teach those lessons.
Children can also benefit from having their own savings account early on. Check out number 6 for more ideas!
3. Use games. Kids learn best when they’re having fun, and there are many games for teaching kids about finances. Simple games like Penny Toss get them started, then more complex board and online games like Monopoly and U.S. Mint online games can teach them about saving, investing, debt and credit cards.
4. Don’t stop at saving. Some parents think they have done their part when they encourage kids to save every bit of money that comes their way. There is nothing wrong with teaching the value of saving, but remember: They need to know how to spend wisely, too.
5. Build a budget together. A budget is a good, concrete way to show little ones how you plan your spending – particularly when you respond to requests to buy things with “That’s not in the budget.” Make sure you include a plan for saving in your budget, so that they see the relationship between saving and spending.
6. Let your financial institution help. Most financial institutions offer financial education programs for kids. At Cobalt Credit Union, the Dollar Dog Kids Club savings account is just for kids, and there are prizes, gifts and contests to help them enjoy learning the value of saving. Accounts designed for kids, like the Dollar Dog Kids Club savings account, can help encourage good financial habits at a young age.
7. Treat mistakes as teachable moments. When you hear requests for more money or that a teenager’s investment went south, use those moments to teach your kids about choices. Bailing them out may teach them that there is always more money somewhere, and that is not a lesson you want to teach.
8. Do not neglect debt. For many major purchases, borrowing sensibly is a necessary skill, even if you hope your kids will not have to do it too much. Make a small loan to them and charge them interest, then show them how much the total was in the end.
Download our free Kids and Money 101: Discussion Guide and Budget Worksheet for more ways to learn.
